Wednesday, December 21, 2011

In 2009, when General Motors went bust, it was Uncle Sam (the taxpayers) who came to the rescue. But who was the biggest beneficiary of the taxpayer funded bailout? It was the United Auto Workers Union. As was said by Mark Hirschey in the LJWorld.com back in June of 2009,

"This Treasury-imposed restructuring is not a GM bailout; it is a UAW bailout with far-reaching ramifications. GM’s common stockholders are getting wiped out and public bondholders are getting hammered. Taxpayers and consumers get to pay billions of dollars for GM products that they never received or even wanted in the first place. All of this is to reward the UAW for bringing to its knees what was once an American icon."

Yet, in spite of all the help and money we, the taxpayers unwillingly shoveled into the coffers of the big union, it looks like they are about to go broke, anyway. As reported in Reuters.com,

"Two years after the wrenching restructuring of the U.S. auto industry and the bankruptcies that remade General Motors and Chrysler, the UAW is facing its own financial reckoning. America's richest union has been living beyond its means and running down its savings, an analysis of its financial records shows. Unless King and other officials succeed with a turnaround plan still taking shape, the next financial crisis in Detroit may not be at one of the automakers but at the UAW itself."

This is a story about the collision of greed and good intentions. The union leveraged their power and greed against a President who owed his election to Big Labor and the good intentions of a Congress that was hornswoggled into believing they had to act to save hundreds of thousands of jobs by bailing out the largest industrial corporation in history.

They could have allowed the car companies to use the process that was put in place in American law many years ago. It's called bankruptcy protection. The bills would have been paid, the company would have had ample time and opportunity to restructure itself and GM could well have come out in as good or better shape than it has so far without billions of taxpayer dollars being spent - dollars that will never be returned.

In October of 2008, as a candidate for the US Senate, I was asked about the bailouts that were being considered at that time. My response was recorded in the Detroit News:

"Hoogendyk stated that there has been many other American carmakers that began, tried, and failed in the auto industry and America still survived. This was part of his opposition to the $25 billion federal loan package for auto companies that Congress recently passed, Hoogendyk said he believes it's not government's business to make loans to individual companies."

I was roundly criticized for saying that back in 2008. Ironically, the "$25 billion federal loan package" has turned into a nearly $25 billion loss for taxpayers as reported in the Detroit News last month. Hmmm...

As bad as the free market may seem, it is still the best way for individuals and corporations to sink or swim.

According to research done by Mackinac Center for Public Policy, the electric-powered Chevy Volt may have as much as $250,000 in federal and state tax incentives per car. In other words, taxpayers are covering the risk in this venture by General Motors into electric powered automobiles. Read the full article in Capitol Confidential here.

Back in the "old days" entrepreneurs invested their own money or found venture capitalists to take the risk on a new idea. Or maybe they would go public, pitch an idea and see if anyone wanted to buy stock in the company. The downside for the investor? He lost it all, but the upside was that he could become a millionaire. This scenario has occurred thousands of times.

Today, we have members of Congress and state legislators who vote either for direct aid (bailouts) or huge tax incentives and subsidies to pick up the risk in place of the private investor.

What do you think are the chances of success when the manufacturers are using somebody else's money instead of their own?

I suppose you could argue that the Volt will ultimately be a huge success and that GM will sell millions of units at a tidy profit. But, if they do, will the taxpayer benefit the way the private investor would have? No, they will not. And if they don't, who will pick up the tab? I think you know the answer to that one.

Tuesday, December 20, 2011

The conventional wisdom is that the Democrat Party is the party of "Big Labor" and the union bosses. The Republicans are the party of "Big Business" and the corporate fat-cat CEO's, right? Well, what is one way to uncover the truth on that assertion? "Follow the money."

Do the unions spend their PAC money supporting Democrat candidates who will protect their interests? Do the corporate PAC's give their dollars to the Republicans so they will continue to get big tax breaks and "corporate welfare?"

I did a little research using OpenSecrets.org, the web site that tracks campaign contributions. Here is what I found. No matter how far down the list you look, union PAC's all give donations to Democrats at about a 24 to 1 rate. 96% of all union PAC dollars go to the Democrats. But what about "business" PAC's? This is where it gets interesting.

Of the top 8 business PAC's, 52% of the dollars go to Republicans, 48% goes to Democrats.
The union bosses are putting all their eggs in the Democrats' basket. The business groups like to play both sides of the fence. They want everybody in office beholding to them. See the chart below or go to the opensecrets.org web site for more details.

The top 8 union PAC's are American Federation of Teachers, AFSCME, Teamsters, Electrical Workers, Laborers, National Education Association, Carpenters, and Engineers.

The top 8 business PAC's are Bankers, Home Builders, AT&T, Auto Dealers, Beer Wholesalers, Boeing, Honeywell and the Realtors.

The top eight unions gave $19 million and the top eight business PAC's gave $24 million to candidates. Combined, almost 70% of these dollars went to Democrats.

How will politicians vote when bills come before them affecting unions, or the auto business, or the banks, etc? It's easy to become cynical of our elected officials when you see these kinds of dollars circulating. And it's also a little easier to see why the banks, the UAW and the auto companies got bailed out by us, the taxpayers. Oh, and by the way, the UAW gave 100% of its PAC money to Democrats.

Friday, December 16, 2011

While this chart is labelled "Obama Budget", in reality, it is Congress that holds the purse strings. Appropriations of taxpayer funds are in the control of the House and the Senate. They have not been effective in reigning in spending.

from Heritage.org
It has been some 1,000 days since the Senate passed a budget. It is clear that fiscal discipline is not emerging from that chamber anytime soon. And the House, which in April passed a budget resolution that would have set America on a stronger fiscal path, began the year with such great promise. The new leadership in Washington, ushered in by the Tea Party wave of 2010, pledged to be serious stewards of the people’s pocketbook. With December 15th's mega-omnibus bill, those who were eager to right the fiscal ship have been silenced by leadership that prefers bigger government, higher spending, and slinking out of the Capitol with an appropriations package that comes up short by spending too much. Get the details here.

from the Washington PostCongressional negotiators struck a deal Thursday that overturns the new rules that were to have banned sales of traditional incandescent light bulbs beginning next year. Read more.

Friday, December 9, 2011

When you hear a public employee, whether it be a teacher or a county employee complain that they don't make the kind of income they could in the private sector, just ask them about their pension benefits.

The Taxpayers United of America just released data on pension payouts in Michigan. Remember, pensions to retired public employees are paid for by YOU, the taxpayer.

Here are a few examples from the Taxpayers United of America web site:

The top 100 retired teachers are collecting at least $90,000 per year in pension benefits

The top 25 Ingham County retirees are collecting between $55,000 and $64,000. (This is based on average annual salaries of $49,000 and retirment at age 55)

The top 25 Kent County retirees are collecting between $67,000 and $96,000, annually.

Assuming retirement at age 55 and 30 years to collect, total payouts can range from $1.6 to $6 million! And every dime of it has to come from your state and local tax bill. How many "working stiffs" in the private sector are seeing that kind of benefit? Well, if you wanted to set up a pension for yourself by saving every year out of your paycheck, it would go something like this:

Assume you want to receive $100,000 per year, like over 50 retired teachers in Michigan. How much would you need to save every year? You can use a payroll deduction into a 401k type savings plan. This way, you can use pre-tax dollars. Now, let's assume you can earn an average of 5% interest every year on the money you save. Let's also assume that you want to retire at age 55 and have a perpetual fund of cash to pay you $100,000 per year.

Using those assumptions, you would need to start working at age 20, work and save for 35 years, and put away $22,143.42 each year (1845.25 per month) for your retirement. When you reach age 55, you will have $2,000,000 in the bank, from which you can draw $100,000 per year. If the principle continues to earn 5% per year, you should still have a bundle left over at age 85 to leave to your children or to charity.

Yeah, I guess it's time for pension reform. The simple solution would be to convert all public employees to defined contribution retirement plans from the defined benefit plans they now currently enjoy. Most state employees are on defined contribution, they were converted from defined benefit over ten years ago. But education and municipal employees are still on the defined benefit pension system. Pension benefits are putting an undue strain on the budgets of cities, counties and school districts around the state.

Tuesday, December 6, 2011

A 13-yr. old boy has serious health problems. The doctor suggests specific tests. The parents give the OK and then are told they may not see the results without the child's consent.

A five-yr. old boy comes home from Kindergarten with the book "My Two Dads," a book about "diversity." The parents are shocked and go to the school to protest. They simply ask that their son be allowed to opt-out of the class. Result: father is arrested.

A 14-yr. old boy decides he does not want to go to church three times a week. The courts remove him from his home, put him in foster care and hold a hearing. Result: the judge says he only needs to go to church once a week.

Are these stories fantasy? Are they accounts from Communist China? No, they are true, and they happened here, in the good ol' USA. The truth is, your rights as a parent are under serious threat. Watch this short documentary film and find out what can be done to protect your rights as a parent.

You are welcome to attend the Center Right meeting Thursday, December 15, in Lansing to learn what is being done in the legislature to preserve fundamental parental rights through a proposed amendment to the U.S. Constitution.

The meeting will be held Thursday, December 15, 9:00 a.m. at 116 West Ottawa, Lansing, MI. Admission is free. Coffee and cookies will be served. Please RSVP here.

From the Michigan Capitol Confidential...
As superintendent of Kalamazoo Public Schools, Michael Rice had a total compensation of $321,252 in 2010. Yet Rice was one of a dozen public school superintendents who signed a letter criticizing charter public schools and raising the “for-profit” status of some of the charter school’s contracted management companies.

The nonprofit Ann Arbor Public Schools just agreed to pay its new superintendent $1.22 million over five years (base salary of $245,000). In fact, the nonprofit Ann Arbor school district has seen its total revenues jump from $195 million in 2005 to $207 million in 2010, despite having about 400 fewer students, according to the Michigan Department of Education.

Taylor Public Schools pays all of its kindergarten teachers and nine elementary school gym teachers more than the city’s median income for an entire household. The city of Taylor’s median income for a household is $42,944. Taylor Public Schools had nine elementary school phys-ed teachers and all 23 of its kindergarten teachers make more than $43,000 in 2010. The average teacher salary in 2010 in the district was $65,477, about $23,000 more than the median household income.

Why would these high-paid "non-profit" public school employees complain about other public schools which are under the same rules as their school, just because they are operated by for-profit companies? Read the whole story here.

If you are a home owner, you know that your annual property taxes are calculated based on the assessed value of your home. If you own a home in Kalamazoo County, you may be paying as much as $1,000 per year too much! Why?

When values go up, the assessment goes up and your taxes increase. When values go down, as they have over the last four years or so, assessments should follow. But they haven't. Find out why at our special Center Right Town Hall Meeting.

And, what about that bridge to Canada? Is the County Commission poised to pass a resolution of support? Get some answers on the bridge controversy Tuesday.

Monday, December 5, 2011

This chart from the Heritage Foundation shows that during the Bush era, while spending accelerated as a percentage of the Gross Domestic Product, it actually stabilized in the last years of his presidency. Meanwhile, revenues were growing much faster than spending. During the Obama era, spending exploded, as tax revenues declined. At the current rate of spending and revenue, the gap between the two will only widen, even though projections suggest a huge increase in revenue to the government. The problem will not be lack of income, it will be lack of spending restraint. Read the full story here.

Saturday, December 3, 2011

In Michigan, public school employees who are members of the union, i.e. the Michigan Education Association, have their dues automatically deducted from their paychecks. A significant portion of those dues find their way to Political Action Committees (PACs). The PACs give donations of up to $5,000 to candidates for office who support the union's goals. In 2010 alone, the MEA-PAC made over $513,000 in contributions.

Explaining, in part, the court said such deductions are illegal: “because public resources are being used to advance the political objectives of the committee” and are to be considered an expenditure “because public services and facilities in assistance of these same political objectives are being provided.”

Legislation to prohibit public school districts from deducting contributions to PACs from employee paychecks appears to be on a fast track in the Michigan House.

House Bills 5085 and 5086, sponsored by Reps. Mike Shirkey and Paul Opsommer, are scheduled to be taken up by the House Redistricting and Elections Committee on Dec. 6. It seems likely the measures will receive committee approval that day and be sent to the House floor. The apparent goal is to have the legislation passed by the House and sent to the Senate before the upcoming end-of-the-year holiday break.

“We think this is good policy,” said House Redistricting and Elections Committee Chair Pete Lund, R-Shelby Township, “The state should not be doing the collecting when people want to pay into PACs.” Read more.